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?Managing Employee Performance? from Human Resource Management was adapted by The Saylor Foundation

 

under a Creative Commons Attribution-NonCommercial-ShareAlike 3.0 license without attribution as requested by the

 

work?s original creator or licensee. Chapter 10: Managing Employee Performance

 

A Dilemma

 

You have been the store manager for a large coffee shop for three years but have never had this type of

 

problem employee to handle before, and you schedule a meeting to speak with your HR manager about it.

 

Jake, one of your best employees, has recently begun to have some problems. He is showing up to work

 

late at least twice per week, and he missed the mandatory employee meeting on Saturday morning. When

 

you ask him about it, he says that he is having some personal problems and will try to get better.

 

For a bit of time, Jake does get better, comes to work on time, and is his normal, pleasant self when

 

helping customers. However, the situation gets more serious two weeks later when Jake comes to work

 

smelling of alcohol and wearing the same clothes he wore to work the day before. You overhear some of

 

the employees talking about Jake?s drinking problem. You pull Jake aside and ask him what is happening.

 

He says his wife kicked him out of the house last night and he stayed with a friend, but he didn?t have time

 

to gather any of his belongings when he left his house. You accept his answer and hope that things will get

 

better.

 

A week later, when Jake arrives for his 10?7 shift, he is obviously drunk. He is talking and laughing

 

loudly, smells of alcohol, and has a hard time standing up. You pull him aside and decide to have a serious

 

talk with him. You confront him about his drinking problem, but he denies it, saying he isn?t drunk, just

 

tired from everything happening with his wife. You point out the smell and the inability to stand up, and

 

Jake starts crying and says he quit drinking ten years ago but has recently started again with his

 

impending divorce. He begs for you to give him another chance and promises to stop drinking. You tell

 

him you will think about it, but in the meantime, you send him home.

 

The meeting with HR is this afternoon and you feel nervous. You want to do what is right for Jake, but you

 

also know this kind of disruptive behavior can?t continue. You like Jake as a person and he is normally a

 

good employee, so you don?t want to fire him. When you meet with the HR manager, he discusses your

 

options. The options, he says, are based on a discipline process developed by HR, and the process helps to

 

ensure that the firing of an employee is both legal and fair. As you review the process, you realize that

 

ignoring the behavior early on has an effect on what you can do now. Since you didn?t warn Jake earlier,

 

you must formally document his behavior before you can make any decision to let him go. You hope that

 

Jake can improve so it doesn?t come down to that.

 

Saylor URL: http://www.saylor.org/books Saylor.org

 

296 10.1

 

1. Handling Performance LEARNING OBJECTIVES Explain the types of performance issues that occur in the workplace, and the internal and

 

external reasons for poor performance. 2. Understand how to develop a process for handling employee performance issues.

 

3. Be able to discuss considerations for initiating layoffs or downsizing.

 

As you know from reading this book so far, the time and money investment in a new employee is

 

overwhelming. The cost to select, hire, and train a new employee is staggering. But what if that new

 

employee isn?t working out? This next section will provide some examples of performance issues and

 

examples of processes to handle these types of employee problems. Types of Performance Issues

 

One of the most difficult parts of managing others isn?t when they are doing a great job?it is when they

 

aren?t doing a good job. In this section, we will address some examples of performance issues and how to

 

handle them.

 

1. Constantly late or leaves early. While we know that flexible schedules can provide a work-life balance,

 

managing this flexible schedule is key. Some employees may take advantage and, instead of working at

 

home, perform nonwork-related tasks instead. 2. Too much time spent doing personal things at work. Most companies have a policy about using a

 

computer or phone for personal use. For most companies, some personal use is fine, but it can become a

 

problem if someone doesn?t know where to draw the line.

 

3. Inability to handle proprietary information. Many companies handle important client and patient

 

information. The ability to keep this information private for the protection of others is important to the

 

success of the company.

 

4. Family issues. Child-care issues, divorce, or other family challenges can cause absenteeism, but also poor

 

work quality. Absenteeism is defined as a habitual pattern of not being at work.

 

5. Drug and alcohol abuse. The US Department of Labor says that 40 percent of industrial fatalities and 47

 

percent of industrial injury can be tied to alcohol consumption. The US Department of Labor estimates

 

that employees who use substances are 25?30 percent less productive and miss work three times more

 

often than nonabusing employees. [1] Please keep in mind that when we talk about substance abuse, we are Saylor URL: http://www.saylor.org/books Saylor.org

 

297 talking about not only illegal drugs but prescription drug abuse as well. In fact, the National Institute on

 

Drug Abuse says that 15.2 million Americans have taken a prescription pain reliever, tranquilizer, or

 

sedative for nonmedical purposes at least once. [2] Substance abuse can cause obvious problems, such as tardiness, absenteeism, and nonperformance, but it can also result in accidents or other more serious

 

issues.

 

6. Nonperforming. Sometimes employees are just not performing at their peak. Some causes may include

 

family or personal issues, but oftentimes it can mean motivational issues or lack of tools and/or ability to

 

do their current job.

 

7. Conflicts with management or other employees. While it is normal to have the occasional conflict at work,

 

some employees seem to have more than the average owing to personality issues. Of course, this affects an

 

organization?s productivity. 8. Theft. The numbers surrounding employee theft are staggering. The American Marketing Association

 

estimates $10 billion is lost annually owing to employee theft, while the FBI estimates up to $150 billion

 

annually. [3] Obviously, this is a serious employee problem that must be addressed. 9. Ethical breaches. The most commonly reported ethical breaches by employees include lying, withholding

 

information, abusive behavior, and misreporting time or hours worked, according to a National Business

 

Ethics study. [4] Sharing certain proprietary information when it is against company policy and violating noncompete agreements are also considered ethical violations. Many companies also have a

 

nonfraternization policy that restricts managers from socializing with nonmanagement employees.

 

10. Harassment. Engagement of sexual harassment, bullying, or other types of harassment would be

 

considered an issue to be dealt with immediately and, depending on the severity, may result in immediate

 

termination.

 

11. Employee conduct outside the workplace. Speaking poorly of the organization on blogs or Facebook is an

 

example of conduct occurring outside the workplace that could violate company policy. Violating specific

 

company policies outside work could also result in termination. For example, in 2010, thirteen Virgin

 

Atlantic employees were fired after posting criticisms about customers and joking about the lack of safety

 

[5] on Virgin airplanes in a public Facebook group. In another example, an NFL Indianapolis Colts

 

cheerleader was fired after racy Playboy promotional photos surfaced (before she became a cheerleader)

 

that showed her wearing only body paint.

 

Saylor URL: http://www.saylor.org/books [6] Saylor.org

 

298 While certainly not exhaustive, this list provides some insight into the types of problems that may be

 

experienced. As you can see, some of these problems are more serious than others. Some issues may only

 

require a warning, while some may require immediate dismissal. As an HR professional, it is your job to

 

develop policies and procedures for dealing with such problems. Let?s discuss these next. FORTUNE 500 FOCUS To handle attendance problems at many organizations, a no-fault attendance plan is put into place. In this

 

type of plan, employees are allowed a certain number of absences; when they exceed that number, a

 

progressive discipline process begins and might result in dismissal of the employee. A no-fault attendance

 

policy means there are no excused or unexcused absences, and all absences count against an employee.

 

For example, a company might give one point for an absence that is called in the night before work, a half

 

point for a tardy, and two points for a no-call and no-show absence. When an employee reaches a certain

 

number determined by the company, he or she is disciplined. This type of policy is advantageous in

 

industries in which unplanned absences have a direct effect on productivity, such as manufacturing and

 

production. Another advantage is that managers do not need to make judgment calls on what is an

 

excused versus an unexcused absence, and this can result in fairness to all employees.

 

One such company with a no-fault attendance policy is Verizon Communications. However, the Equal

 

Employment Opportunity Commission (EEOC) investigated this policy and announced that Verizon will

 

pay $20 million to resolve a disability discrimination lawsuit. [7] The lawsuit said that the company, through use of the no-fault attendance policy, denied reasonable accommodations required by the

 

Americans with Disabilities Act (ADA). As a result, hundreds of Verizon employees were disciplined or

 

fired. In this case, the EEOC cites paid or unpaid leave as one way for an employer to provide reasonable

 

accommodations for an employee with a disability. The policy specified there would be no exceptions

 

made to the no-fault attendance policy to accommodate employees with ADA disabilities. When

 

discussing the case, the EEOC chair justified the agency?s position by saying, ?Flexibility on leave can

 

enable a worker with a disability to remain employed and productive, a win for the worker, employer, and

 

the economy. By contrast, an inflexible leave policy may deny workers with disabilities a reasonable

 

accommodation.? [8] Part of the settlement also involved additional training to Verizon employees on ADA and how to administer the attendance plan. This successful lawsuit shows that even the most seemingly

 

clear performance expectations must be flexible to meet legal obligations.

 

Saylor URL: http://www.saylor.org/books Saylor.org

 

299 HUMAN RESOURCE RECALL

 

What would you do if you saw a coworker taking a box of pens home from the office? What Influences Performance?

 

When an employee isn?t performing as expected, it can be very disapointing. When you consider the

 

amount of time it takes to recruit, hire, and train someone, it can be disappointing to find that a person

 

has performance issues. Sometimes performance issues can be related to something personal, such as

 

drug or alchol abuse, but often it is a combination of factors. Some of these factors can be internal while

 

others may be external. Internal factors may include the following:

 

1. Career goals are not being met with the job. 2. There is conflict with other employees or the manager.

 

3. The goals or expectations are not in line with the employee?s abilities.

 

4. The employee views unfairness in the workplace.

 

5. The employee manages time poorly. 6. The employee is dissatisfied with the job.

 

Some of the external factors may include the following:

 

1. The employee doesn?t have correct equipment or tools to perform the job. 2. The job design is incorrect.

 

3. External motivation factors are absent.

 

4. There is a lack of management support.

 

5. The employee?s skills and job are mismatched.

 

All the internal reasons speak to the importance once again of hiring the right person to begin with. The

 

external reasons may be something that can be easily addressed and fixed. Whether the reason is internal

 

or external, performance issues must be handled in a timely manner. This is addressed in Section 10.1.3

 

"Defining Discipline". We discuss performance issues in greater detail in Chapter 11 "Employee

 

Assessment". Defining Discipline

 

If an employee is not meeting the expectations, discipline might need to occur.Discipline is defined as the

 

process that corrects undesirable behavior. The goal of a discipline process shouldn?t necessarily be to

 

punish, but to help the employee meet performance expectations. Often supervisors choose not to apply

 

Saylor URL: http://www.saylor.org/books Saylor.org

 

300 discipline procedures because they have not documented past employee actions or did not want to take

 

the time to handle the situation. When this occurs, the organization lacks consistency among managers,

 

possibility resulting in motivational issues for other employees and loss of productivity.

 

To have an effective discipline process, rules and policies need to be in place and communicated so all

 

employees know the expectations. Here are some guidelines on creation of rules and organizational

 

policies:

 

1. All rules or procedures should be in a written document. 2. Rules should be related to safety and productivity of the organization.

 

3. Rules should be written clearly, so no ambiguity occurs between different managers.

 

4. Supervisors, managers, and human resources should communicate rules clearly in orientation, training,

 

and via other methods. 5. Rules should be revised periodically, as the organization?s needs change.

 

Of course, there is a balance between too many ?rules? and giving employees freedom to do their work.

 

However, the point of written rules is to maintain consistency. Suppose, for example, you have a manager

 

in operations and a manager in marketing. They both lead with a different style; the operations manager

 

has a more rigid management style, while the marketing manager uses more of a laissez-faire approach.

 

Suppose one employee in each of the areas is constantly late to work. The marketing manager may not do

 

anything about it, while the operations manager may decide each tardy day merits a ?write-up,? and after

 

three write-ups, the employee is let go. See how lack of consistency might be a problem? If this employee

 

is let go, he or she might be able to successfully file a lawsuit for wrongful termination, since another

 

employee with the same performance issue was not let go. Wrongful termination means an employer has

 

fired or laid off an employee for illegal reasons, such as violation of antidiscrimination laws or violation of

 

oral and/or written employee agreements. To avoid such situations, a consistent approach to managing

 

employee performance is a crucial part of the human resources job. The Role of the Performance Appraisal in Discipline

 

Besides the written rules, each individual job analysis should have rules and policies that apply to that

 

specific job. We discuss performance appraisal in further detail inChapter 11 "Employee Assessment", but

 

it is worth a mention here as well. The performance appraisal is a systematic process to evaluate

 

employees on (at least) an annual basis. The organization?s performance appraisal and general rules and

 

Saylor URL: http://www.saylor.org/books Saylor.org

 

301 policies should be the tools that measure the employee?s overall performance. If an employee breaks the

 

rules or does not meet expectations of the performance appraisal, the performance issue model, which we

 

will discuss next, can be used to correct the behavior. Performance Issue Model

 

Because of the many varieties of performance issues, we will not discuss how to handle each type in detail

 

here. Instead, we present a model that can be used to develop policies around performance, for fairness

 

and consistency.

 

We can view performance issues in one of five areas. First, the mandated issue is serious and must be

 

Figure 10.1 The Process for Handling Performance Issues addressed immediately. Usually, the mandated issue

 

is one that goes beyond the company and could be a

 

law. Examples of mandated issues might include an

 

employee sharing information that violates privacy

 

laws, not following safety procedures, or engaging in

 

sexual harassment. For example, let?s say a hospital

 

employee posts something on his Facebook page that

 

violates patient privacy. This would be considered a

 

mandated issue (to not violate privacy laws) and

 

could put the hospital in serious trouble. These types

 

of issues need to be handled swiftly. A written policy

 

detailing how this type of issue would be handled is

 

crucial. In our example above, the policy may state

 

that the employee is immediately fired for this type

 

of violation. Or, it may mean this employee is

 

required to go through privacy training again and is

 

given a written warning. Whatever the result,

 

developing a policy on how mandated issues will be

 

handled is important for consistency.

 

The second performance issue can be called a single

 

incident. Perhaps the employee misspeaks and Saylor URL: http://www.saylor.org/books Saylor.org

 

302 insults some colleagues or perhaps he or she was over budget or late on a project. These types of incidents

 

are usually best solved with a casual conversation to let the employee know what he or she did wasn?t

 

appropriate. Consider this type of misstep a development opportunity for your employee. Coaching and

 

working with the employee on this issue can be the best way to nip this problem before it gets worse. Often when single incidents are not immediately corrected, they can evolve into a behavior pattern, which

 

is our third type of performance issue. This can occur when the employee doesn?t think the incident is a

 

big deal because he hasn?t been correct before or may not even realize his is doing something wrong. In

 

this case, it?s important to talk with the employee and let him know what is expected.

 

If the employee has been corrected for a behavior pattern but continues to exhibit the same behavior, we

 

call this a persistent pattern. Often you see employees correct the problem after an initial discussion but

 

then fall back into old habits. If they do not self-correct, it could be they do not have the training or the

 

skills to perform the job. In this phase of handling performance issues, it is important to let the employee

 

know that the problem is serious and further action will be taken if it continues. If you believe the

 

employee just doesn?t have the skills or knowledge to perform the job, asking him or her about this could

 

be helpful to getting to the root of the problem as well. If the employee continues to be nonperforming,

 

you may consider utilizing the progressive discipline process before initiating an employee separation.

 

However, investigating the performance issue should occur before implementing any sort of discipline. Investigation of Performance Issues

 

When an employee is having a performance issue, often it is our responsibility as HR professionals to

 

investigate the situation. Training managers on how to document performance failings is the first step in

 

this process. Proper documentation is necessary should the employee need to be terminated later for the

 

performance issue. The documentation should include the following information:

 

1. Date of incident 2. Time of incident

 

3. Location (if applicable) of incident

 

4. A description of the performance issue

 

5. Notes on the discussion with the employee on the performance issue 6. An improvement plan, if necessary

 

Saylor URL: http://www.saylor.org/books Saylor.org

 

303 7. Next steps, should the employee commit the same infraction 8. Signatures from both the manager and employee

 

With this proper documentation, the employee and the manager will clearly know the next steps that will

 

be taken should the employee commit the infraction in the future. Once the issue has been documented,

 

the manager and employee should meet about the infraction. This type of meeting is called

 

an investigative interview and is used to make sure the employee is fully aware of the discipline issue. This

 

also allows the employee the opportunity to explain his or her side of the story. These types of meetings

 

should always be conducted in private, never in the presence of other employees.

 

In unionized organizations, however, the employee is entitled to union representation at the investigative

 

interview. This union representation is normally calledinterest based bargaining [9] referring to a National Labor Relations Board case that went to the United States Supreme Court in 1975. Recently, Weingarten

 

rights continued to be protected when Alonso and Carus Ironworks was ordered to cease and desist from

 

threatening union representatives who attempted to represent an employee during an investigative

 

interview. [10] Options for Handling Performance Issues

 

Our last phase of dealing with employee problems would be a disciplinary intervention. Often this is

 

called the progressive discipline process. It refers to a series of steps taking corrective action on

 

nonperformance issues. The progressive discipline process is useful if the offense is not serious and does

 

not demand immediate dismissal, such as employee theft. The progressive discipline process should be

 

documented and applied to all employees committing the same offenses. The steps in progressive

 

discipline normally are the following:

 

1. First offense: Unofficial verbal warning. Counseling and restatement of expectations. 2. Second offense: Official written warning, documented in employee file.

 

3. Third offense: Second official warning. Improvement plan (discussed later) may be developed.

 

Documented in employee file.

 

4. Fourth offense: Possible suspension or other punishment, documented in employee file.

 

5. Fifth offense: Termination and/or alternative dispute resolution. Saylor URL: http://www.saylor.org/books Saylor.org

 

304 Figure 10.2Sample of a Performance Improvement Plan Alternative Dispute Resolution

 

Another option in handling disputes, performance issues, and terminations

 

isalternative dispute resolution (ADR). This method can be effective in getting two parties to come to a

 

resolution. In ADR, an unbiased third party looks at the facts in the case and tries to help the parties come

 

to an agreement. In mediation, the third party facilitates the resolution process, but the results of the

 

process are not binding for either party. This is different from arbitration, in which a person reviews the

 

case and makes a resolution or a decision on the situation. The benefits of ADR are lower cost and

 

flexibility, as opposed to taking the issue to court. We discuss these types of systems in greater detail

 

in Chapter 12 "Working with Labor Unions". Saylor URL: http://www.saylor.org/books Saylor.org

 

305 Some organizations use a step-review system. In this type of system, the performance issue is reviewed by

 

consecutively higher levels of management, should there be disagreement by the employee in a discipline

 

procedure. Some organizations also implement a peer resolution system. In this type of system, a

 

committee of management and employees is formed to review employee complaints or discipline issues.

 

In this situation, the peer review system normally involves the peer group reviewing the documentation

 

and rendering a decision. Another type of ADR is called the ombudsman system. In this system, a person

 

is selected (or elected) to be the designated individual for employees to go to should they have a complaint

 

or an issue with a discipline procedure. In this situation, the ombudsman utilizes problem-solving

 

approaches to resolve the issue. For example, at National Geographic Traveler Magazine an ombudsman

 

handles employee complaints and issues and also customer complaints about travel companies. Employee Separation

 

Employee separation can occur in any of these scenarios. First, the employee resigns and decides to leave

 

the organization. Second, the employee is terminated for one or more of the performance issues listed

 

previously. Lastly, absconding is when the employee decides to leave the organization without resigning

 

and following the normal process. For example, if an employee simply stops showing up to work without

 

notifying anyone of his or her departure, this would be considered absconding. Let?s discuss each of these

 

in detail. Employee separation costs can be expensive, as we learned in Chapter 7 "Retention and

 

Motivation".In the second quarter in 2011, for example, Halliburton reported $8 million in employee

 

separation costs. [11] Resignation means the employee chooses to leave the organization. First, if an employee resigns, normally

 

he or she will provide the manager with a formal resignation e-mail....

 


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